Mortgage Interest Relief when you have two properties....

M

macsiulai

Guest
I co-own an apartment with a friend of mine. We bought it 3 years ago and were first time buyers so we're claiming the appropriate mortgage interest relief.

Since then, I've separately purchased a house with my wife. As we are not first time buyers - we are not claiming interest relief on the house but it continues to be claimed against the apartment.

What is the position with this? should I be switching the relief from the apartment to the house and how would that impact my friend who still lives in the apartment?
 
You can only claim TRS (tax relief at source) on your residence. You should not be claiming TRS on the apartment but your co-owner can if s/he is still living there. You & your wife can claim TRS on your house, but the rate will depend on how much of your TRS you (& your wife) have left at the higher level.
 
Thanks. How do I go about this? do I contact the mortgage lender for the apartment and they will arrange to adjust or pro-rata the TRS accordingly between my friend and I?

The flow and questioning of the application form for TRS does not appear to be suitable or sympathetic towards my particular situation and I don't want to do anything that will negatively impact my friend.
 
The mortgage lender will only act on what Revenue tells them. I'd fill in a TRS form for your current property and then write to Revenue explaining when you changed over. This should not affect your friend at all as they would have presumably filled in a separate TRS form. Do you have a joint mortgage? No matter what you do, you won't negatively impact your friend as their situation hasn't changed at all - they claim 50% of the interest against their TRS (assuming you both pay 50/50)
 
Thank you and sorry one more question. The mortgage on the house is not my wife's first mortgage. She had a mortgage as part of a previous relationship from 2000 to 2005 when she was bought out. How does that impact me transferring TRS from the apartment to the house ?
 
If you are joint owners, then you each get TRS for a married couple - you would divide up the TRS depending on what level each of you is at. For example, if the joint TRS rate is €20,000 per annum that's 10k each of interest (your max allowable). If, e.g. you were in year 1 of your TRS (which you are not, but for the sake of the example), you would get 25% relief on interest up to that 10k (i.e. bought for the first time in 2009). If your wife was in year 5 of her TRS, she would get 22.5% for year 5 and 20% for years 6 & 7. You need to add up the interest payments and, if you are joint and equal owners, divide those interest payments by 2 and then apply the different TRS rates to each portion. That said, the Revenue should do all that for you (or tell your bank the calcs) once you give them all the relevant information.
 
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